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Bolt is guilty, but the law is wrong – let the markets deal with racial discrimination

The law shouldn’t be dealing with complaints like those made against Andrew Bolt. AAP/Julian Smith.

Political activists and bad legislation have combined to create the extraordinary situation where eligibility for awards and prizes can’t be questioned.

Not all prizes and awards – we can still mock Wayne Swan’s Euromoney award – but only those that have an ethnic component to them.

In a society increasingly obsessed with ethnicity and race this will quickly become a problem.

Andrew Bolt [has been found guilty]( of violating section 18C of the Racial Discrimination Act by suggesting that several individuals had claimed Aboriginality in order to further their careers.

Bad law

Despite the fact that some early commentary has focussed on the political orientation of the judge hearing the case, the simple matter is that the legislation itself is bad law.

Positive discrimination abounds and those who want to discriminate are going to find it ever harder to determine eligibility.

People respond creatively to incentives but the legal system has opened an avenue for anyone to claim any ethnicity.

As Sacha Baron Cohen’s Ali G character once asked, “Is it because I’m black?”. I wouldn’t want to cause offense by suggesting he isn’t black.

This case opens all sorts of issues relating to free speech and definitions of ethnicity and so on. A liberal democracy debating, “What is a [insert ethinicty here]"’, is problematic and inconsistent with the individuality we hold dear. A very ugly debate could erupt.

Let the market decide

A far more interesting argument is how to deal with racial discrimination. People seem to be looking more and more to government – yet as this case makes clear that results in very divisive outcomes.

Gary Becker, an economics Nobel laureate, has suggested that discrimination is best managed by the market. Legislation simply suppresses discrimination, whereas market forces punish discrimination.

Those people who have a "taste for discrimination” would manifest their preferences by, say, not employing those they don’t like, or not buying from those they don’t like, and so on.

That means they would restrict the number of trading partners they interact with and so incur higher prices. In short, in a competitive market, racists pay – non-racists don’t.

Problems with legislation

Contrast that with the legal solution – racists can be as racist as they like in private, but they don’t have to pay for that.

Legislation also crowds out personal morality and public ethics. If you really think certain types of behaviour are beyond the pale, social ostracisation rather than litigation may be appropriate.

If an op-ed writer annoys you, send a letter to the editor; tell the whole world how wrong the columnist is.

The great Austrian economists Ludwig von Mises described society as cooperation under the division of labour.

Bad legislation undermines cooperation – people who are incentivised for offense will quickly become offended and clog the legal system with somewhat trivial cases.

For example, an individual on TV with the tee-shirt, “White people make me nervous” should be very nervous right now. The people protesting outside Jewish shops are clearly in violation of the Act.

It is not good enough to argue the legislation had good intentions – bad laws bring the whole legal system into disrepute and ultimately undermine civil society. These issues are best left to the market and personal morality.

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